Catryna Bilyk (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

My question today is to the Minister for Superannuation and Corporate Law, Senator Sherry. Can the minister inform the Senate about the Rudd government’s actions to protect and bolster the Australian economy during this time of global economic turmoil?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

Thanks to Senator Bilyk for her important question. Earlier today, the Senate passed a historically very important bill. Now that it is passed through the parliament, the commencement of the Rudd government’s Financial Claims Scheme will guarantee bank deposits for the next three years and safeguard our financial system. I will turn to the effects of this critical law in a moment. First I want to note that this deposit guarantee represents yet another early, responsible and decisive action by the Rudd Labor government to bolster our economy and shore up our financial system in the midst of the global and economic financial systems crisis.

The opposition today supported the bill, as indeed did the crossbenchers. I want to thank them for their cooperation. However, I do note that, in the opposition’s response, whilst having offered up bipartisanship, they appear to be changing tack and saying the government has taken too long to take the necessary decision. I think this is an extraordinary claim so I want to run through the range of actions taken by the Rudd Labor government over the past almost 12 months.

First, in May the government announced we would provide legislative authority for an increase in the Commonwealth government securities issuance of up to $25 billion to strengthen the Australian financial system and reduce its vulnerability to shocks. Second, the government have moved to quickly guarantee bank funding. If institutions fail to lend to each other, businesses and households cannot obtain credit and therefore the financial system and economy seize up. We have acted to keep our banks in an advantageous position in very difficult international credit markets. Third, we have now guaranteed bank deposits for the next three years. Fourth, we have acted to protect financial institutions from speculators, short selling and market manipulation. We have supported the temporary prohibition on short selling in our market by our independent regulator ASIC, and we have gone further. I have released draft legislation that would require the disclosure of covered short selling, a gap in our disclosure regulation that has existed since 2001.

Fifth, we have acted decisively to support competition and liquidity in the mortgage market. On 3 October the Labor government announced the initial purchase of $4 billion of residential mortgage backed securities to support wholesale funding of financial institutions and improve competition in the market for housing finance. Sixth, we have acted to reform the regulation of financial services and credit in Australia. The states and territories have regulation responsibility for about 20 per cent of our financial sector in Australia. After almost 12 years of inaction in this regard, we have reached agreement with the states to introduce single national standard legislation in respect of the financial sector. Seventh, the government has been active all year in coordinating our actions with key global partners.

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern Australia) Share this | Link to this | Hansard source

You’ve done a lot, Nick. What have you done with the surplus?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

Eighth, Senator Macdonald, is the $10.4 billion Economic Security Strategy announced this week, which will put cash in the pockets of low- and middle-income Australian households and generally bolster our economy against the backdrop of this global financial crisis. This stimulus package is particularly important. It covers a $4.8 billion down payment on pension reform, $3.9 billion in support payments for low- and middle-income families, $1.5 billion to help first home buyers and $187 million to fund a doubling of new training places. Further, the government is accelerating— (Time expired)

Catryna Bilyk (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. Can the minister further update the Senate on the recent passage of any key legislation to deliver on the Rudd government’s Economic Security Strategy?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

As I was just concluding on my initial points: further, the Rudd Labor government are accelerating the implementation of projects to be funded through our three nation-building funds.

We face the biggest financial crisis ever confronted by the modern postwar global economy. We know that some 25 banks have failed worldwide. They have either been bailed out or nationalised. The crisis is contributing to a serious global economic downturn, so the actions I have outlined are very significant. They are decisive, they are timely and they are necessary, and we are particularly pleased to see that the Financial Claims Scheme, which does represent unprecedented action to deal with developments in global financial markets, did pass the Senate this morning. That is necessary to ensure the stability to underwrite and assist the stability of the Australian financial system. It will enhance and strengthen Australia’s crisis management arrangements and will guarantee the deposits in Australian banks, building societies and credit unions for a period of three years—unprecedented action in times of great uncertainty. These sorts of times do require decisive action by government. The Rudd Labor government has acted on a range of fronts to deliver decisive action to help bolster our economy and to help us through this— (Time expired)